Market Overview: Crude Oil Futures
Crude Oil test the trading range low but reversed into a bull doji on the weekly chart. The bulls want a failed breakout below the triangle and the market to reverse to the middle of the trading range. If the market trades higher, the bears want a reversal from another lower high (probably around the 20-week EMA) followed by another leg down completing the wedge pattern (with the first two legs being Aug 5 and Sep 10).
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bull doji with long tails below and above.
- Last week, we said that the market may still trade at least a little lower. Traders will see if the bears can create a follow-through bear bar or will the market trade slightly lower, but stall and reverse to close with a long tail or a bull body.
- The market traded lower earlier in the week but reversed higher from midweek onwards. Friday traded higher but reversed to close off the week’s high.
- Previously, the bears got a reversal from a double top bear flag (Aug 12 and Aug 26).
- They got a strong breakout below the triangle but could not create a follow-through bear bar this week. The bears are not yet as strong as they hoped to be.
- If the market trades higher, they want a reversal from another lower high (probably around the 20-week EMA) followed by another leg down completing the wedge pattern (with the first two legs being Aug 5 and Sep 10).
- The bulls want a reversal from a double bottom bull flag (Jun 4 and Sept 10) or a wedge (Jun 4, Aug 5, and Sep 10).
- They see the current move as a large two-legged move (Jun 4 and Sept 6) within a trading range.
- They want a failed breakout below the triangle and the market to reverse to the middle of the trading range.
- They need to create consecutive bull bars closing near their highs to increase the odds of the bull leg beginning.
- Since this week’s candlestick is a bull doji closing above the middle of its range, it is a buy signal bar for next week albeit weaker.
- Traders will see if the bulls can create a strong entry bar. If they do, that will increase the odds of a retest of the 20-week EMA.
- Or will the market trade slightly higher, but stall and reverse to close with a long tail or a bear body instead?
- The market is trading around the lower third of the large trading range which can be the buy zone of trading range traders.
- Poor follow-through and reversals are hallmarks of a trading range.
- The market is in a large trading range (Trading range high: September 29, Trading range low: May 4).
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
The Daily crude oil chart
- The market traded lower on Tuesday but lacked follow-through selling. Crude Oil then reversed higher from Wednesday onwards. Friday traded higher but reversed into a bear reversal bar.
- Last week, we said that the odds slightly favor the market to trade at least a little lower. Traders will see if the bears can continue to create strong bear bars testing near the December low or will the market trade slightly lower but start to stall and reverse higher instead?
- The bears got a reversal from a double top bear flag (Aug 12 and Aug 26) and a lower high.
- They got a breakout below the triangle pattern with follow-through selling.
- They see this week as a pullback and want at least a small second leg sideways to down to retest the current leg low (Sep 10).
- They want the 20-day EMA to act as resistance.
- The bulls want a failed breakout from the triangle pattern.
- They see the current move as a large two-legged bear leg (Jun 4 and Sep 10).
- They want a reversal from a double bottom bull flag (Jun 4 and Sep 10) or a wedge (Jun 4, Aug 5, and Sep 10). They also see an embedded wedge (Sep 4, Sep 6, and Sep 10).
- The bulls must create consecutive bull bars closing near their highs and trading far above the 20-day EMA to increase the odds of a reversal.
- So far, the selloff from the August 26 high was in a tight bear channel.
- It may be strong enough for traders to expect at least a small retest of the Sep 10 low (even if it forms a higher low) after the current pullback.
- Traders will see if the bears can create a strong retest of the September 10 low followed by another leg down.
- Or will the market trade slightly lower (perhaps early next week) but stall and reverse higher instead?
- The market is trading around the lower third of the large trading range which can be the buy zone of trading range traders.
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
- Poor follow-through and reversals are hallmarks of a trading range.
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